"OPEC+" continues cautious production increase after Strait of Hormuz crisis subsides... and markets await stability test

Washington Message

Washington – Saeed Erikat – 7/6/2026

OPEC+ announced on Sunday that it would raise its oil production by 188,000 barrels per day starting next August, a move that reflects the alliance's continued policy of gradual increases over the past months, amidst attempts to restore balance to global energy markets after months of severe disruptions that accompanied the war on Iran and the closure of the Strait of Hormuz, according to a New York Times report on Sunday.

The decision included Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria, and Oman. The alliance affirmed in an official statement that member states will continue to monitor market conditions continuously, emphasizing the importance of a cautious approach that ensures price stability and a balance between supply and demand.

The announcement came weeks after the United States and Iran signed a framework agreement on June 17 that reopened the Strait of Hormuz to international navigation, ending a closure that lasted nearly four months and led to widespread disruption in global oil supplies, raising crude prices to unprecedented levels before they began to gradually decline.

Brent crude prices had jumped during the first weeks of the war to about $118 per barrel, before falling to about $72 with the resumption of navigation and the start of normal Gulf oil exports, which limited the impact of the latest OPEC+ decision, as analysts believe that markets had already absorbed the supply increase before its official announcement.

This new increase is an extension of a series of similar decisions, after the alliance raised production by 188,000 barrels per day during May and June, and before that announced an increase of 206,000 barrels per day, as part of a monthly review of market conditions, with its next meeting scheduled for August 2.

Despite the economic nature of the decision, its background is closely linked to geopolitical developments that have redrawn the balance of power in the global energy market. The war on Iran led to sharp price fluctuations and posed unprecedented challenges to the oil alliance, which found itself facing a dual test: maintaining its internal cohesion and preventing markets from sliding into a new wave of instability.

Pressure on the alliance increased after the UAE withdrew from OPEC+ in late April, following disagreements with Saudi Arabia over production levels, a development observers considered an indication of escalating differences within the organization, at a time when Riyadh is trying to maintain its leading role in managing the global oil market in coordination with Russia.

Energy experts believe that the resumption of navigation through the Strait of Hormuz has restored a large part of confidence to the markets, after the increases approved by OPEC+ during the war had a limited impact due to the disruption of shipping routes. With the resumption of Gulf exports, production increases are now more capable of reaching global markets, although their price impact remains limited due to abundant supplies and declining fears of supply shortages.

The decision reflects OPEC+'s transition from crisis management to post-war management.

The new production increase does not seem to be an attempt to lower prices as much as it represents an announcement that the alliance has begun to transition from managing a geopolitical crisis to managing a recovery phase. During the closure of the Strait of Hormuz, the problem was not a lack of production, but rather the inability of oil to reach markets. Today, after the resumption of navigation, the goal is to send a reassuring message to consumers that supplies will be sufficient if calm continues. Therefore, the decision has a political dimension as much as it has an economic dimension, and confirms that OPEC+ still sees price stability as a priority that precedes maximizing short-term returns.

The war highlighted the fragility of the global energy market, as the past months have proven that the oil market is affected not only by the volume of production, but also by the security of maritime passages and political stability. The closure of the Strait of Hormuz disrupted a large part of global oil trade, which led to price increases despite no significant decline in the production capacity of exporting countries. This means that maritime transport security has become a factor equal to production itself in determining prices, which will push consuming countries to increase their investments in diversifying energy sources, and will also push producers to search for alternative export routes that reduce reliance on strategic straits.

Despite the alliance's success in maintaining a unified production policy, internal challenges have not disappeared. The disagreements that led to the UAE's exit revealed that the national interests of producing countries may sometimes take precedence over collective considerations, especially given differing financial needs and production ambitions. Furthermore, continued coordination between Saudi Arabia and Russia will remain a crucial factor in the alliance's continued influence in the markets. If regional conditions stabilize and geopolitical risks decline, managing internal disagreements may become more complex than managing market fluctuations themselves, which will test OPEC+'s ability to maintain its unity and leadership role in the coming years.